Tennessee Sheriff, Deputy, His Uncle All Sentenced to Prison in ‘JailCigs’ Scheme

Former Rutherford County, Tennessee Sheriff Robert F. Arnold after being arrested in September 2016 in connection to a scheme to sell e-cigarettes to county inmates. (Photo: Courtesy of the Grayson County, Kentucky, Detention Center)

A Tennessee sheriff, his deputy, and his uncle have now all been sentenced to federal prison in connection with a company they formed to sell e-cigarettes to the inmates at the county lockup.

Former Rutherford County Sheriff Robert F. Arnold, 41, former Deputy Joe L. Russell, 50, and Arnold’s uncle John Vanderveer, 59, have now all been sentenced to stints for their admitted involvement in their “JailCigs” scheme.

Last week, Russell (the deputy) was sentenced to 15 months. Arnold (the sheriff) pleaded guilty in January and was sentenced to 50 months in prison in May. Vanderveer, the sheriff’s uncle, was sentenced in September to a year and a day for tampering with a witness in the investigation, by asking her to destroy documents.

The three founded the company in October 2013, and it continued operations through April 2015. Some 10,500 e-cigarettes were sold to Rutherford inmates, totaling approximately $156,975 in revenues, according to court documents.

The three defrauded Rutherford County out of tens of thousands of dollars of revenue, according to the May 2016 indictment.

“It was a purpose of the conspiracy for Arnold, Russell, and Vanderveer to enrich themselves by using Arnold’s official position as the Sheriff of Rutherford County to provide favorable treatment to JailCigs in selling e-cigarettes for inmates at the Rutherford County jail in exchange for bribes and kickbacks,” the indictment alleged.

The sheriff advertised for the e-cigarettes through posters and other marketing materials right in the Rutherford County jail. The devices were treated as non-contraband, and the guards even distributed and helped test the items were functioning properly, according to the indictment.

Arnold received $66,790 through the scheme, Russell received $52,234.41 and Vanderveer received $49,545.50, the documents show.

The trio also marketed their products to other sheriffs and jails through an e-mail campaign, according to the indictment.

“NEED REVENUE FOR NEXT YEAR’S BUDGET?” one such message stated. “You just mi$$ed the opportunity to easily earn THOUSAND$ for your jail!!!”

The jails in Tennessee that did business with JailCigs were given a $5 commission payment per e-cigarette device, according to the criminal charging documents.

The three pretended as if Arnold and Russell, two Rutherford County employees, had no stake in the company during their years of operation, they admitted.

Arnold lied to reporters in 2014 and 2015, admitting his wife worked for JailCigs intermittently and his aunt and uncle were involved in the company. When the reporters confronted him with the JailCigs Certificate of Organization, he stated he was “kind of shocked” and “taken aback” when it was revealed his deputy Russell was listed on the document.

After the public denials to the media, Vanderveer tampered with the witness, asking her to destroy the old documents that would have outlined the scheme.

The case was investigated by the FBI and the Tennessee Bureau of Investigation, and prosecuted by the Justice Department’s Criminal Division and U.S. Attorney Don Cochran of the Middle District of Tennessee.